Stephanie Walter 0:00
You know, if you’ve ever been a landlord, you know, sometimes you’ll just like let the rents keep coming in at you know, you don’t raise the rents like you should. So we go in we we find places that need the market rents to be adjusted where they should be. But then there’s a whole host of other things we can do to streamline the process. A lot of places do not charge for utilities or if they, they’re, they’re just very consistent with the way that they do that. That’s another way of gathering money. There’s, you know, silly things like pet fees. A lot of landlords don’t charge for that. I even this sounds like weird one, but it’s something we find is is trash, trash, valet services, so any little thing where you can add, you know, a charge for it is going to increase the value of the property.
Welcome to CRE PN Radio for influential commercial real estate professionals who work with investors, buyers and sellers of commercial real estate coast to coast whether you’re an investor, broker, lender, property manager, attorney or accountant We are here to learn from the experts.
J Darrin Gross 1:24
Welcome to Commercial Real Estate Pro Networks, CRE PN Radio. Thanks for joining us. My name is J. Darrin Gross. This is a podcast focused on commercial real estate investment and risk management strategies. Weekly we have conversations with commercial real estate investors and professionals who provide their experience and insight to help you grow your real estate portfolio.
Today, my guests is Stephanie Walter. Stephanie is a capital raiser syndicator and the CEO of Erbe Wealth. She recently retired and sold her insurance agency of 16 years by following the key principles she’s learned from her wealthy investors. And in just a minute, we’re gonna speak with Stephanie, about how to unlearn what we’ve been wired to think about money.
But first, a quick reminder, if you like our show, CRE PN Radio, a couple things you can do to help us out. You can like, share and subscribe. And as always, we encourage you to leave a comment, we’d love to hear from our listeners. Also, if you’d like to see how attractive our guests are, be sure to check out our YouTube channel. And you can find us on YouTube and commercial real estate pro network. And while you’re there, please subscribe. With that on Welcome my guest, Stephanie, welcome to CRE PN Radio. Thank you so much for having me. I’m looking forward to our conversation. Before we get started, if you could take just a minute and share with the listeners a little bit about your background.
Stephanie Walter 3:02
Yeah, I well, started out of college, I got a job in the insurance industry as a claims adjuster actually. And worked in that world for about eight years and realized that I was got pretty burnt out on getting 2% raises every year and was ready to do something different. So in 2006, I decided to start an insurance agency and did that I really loved it loves being an entrepreneur and building my own business that around that same time I started investing in single family homes here in Denver didn’t really have a lot of education with it at all, just you know, felt like I had some good ideas of where to buy where there would probably be some growth in the future. And so made made those choices along with investing and running the insurance agency and then in 2016, I became I was invited to kind of like a boot camp about showing people how to invest in apartment complexes and I learned about what a syndication was and once I I understood how that worked kind of the the heavens opened up and the light shone showed through to me and I just I love the concept. I loved the concept of having a group of people buy a piece of real estate that you know, no one could do on their own. So just love that concept. So I dove real deep into learning the business got joined a program that gives you basically a master’s in learning Real Estate syndication the ins and outs, I did my first syndication in 2018, by myself realized, I did not like doing that by myself, and I would never do it by myself again. So through my network of people, I met my partner. And we realized we had, you know, we we aligned on on what we wanted it as well as he liked doing things I didn’t like doing. So from there began capital raising, and I loved it. We’re on our seventh deal right now. But what I loved the most was getting to know these wealthy investors and kind of realizing that they handled their money a lot differently than I did. So it took until about 2018, where I started following some of these strategies. And I was able to sell my insurance agency, July of this year, because my passive income has replaced my working income. And so instead of retiring, I do love what I do. And so I that’s why I’m here today to talk about it.
J Darrin Gross 6:18
Got it? Well, I’m probably as much more interested than maybe some of our listeners, just based on your background being an insurance and stuff and, and, like you mentioned, seeing the light and, and the past of income, that, you know, growing out enough to, to where you were able to step out of the insurance and do this full time or actually, and if you even need to work based on you know, you said your passive income and that. But I was kind of curious, you mentioned you’d gone to a boot camp, I’ve I’ve talked with numerous coaching mentors, I was just kind of curious if you care to share the name of that.
Stephanie Walter 6:58
Yeah, absolutely. It’s our a mentor. And they have a fantastic, you know, fantastic program. Really, it is, there’s a lot to learn, and you spend several years just, you know, learning a lot and practicing a lot. Because it’s a little bit different than single family because one, you’re responsible for a bunch of investors money. But two, I think you can kind of more wing it with with single family than you can with, you know, commercial real estate for sure.
J Darrin Gross 7:37
Absolutely. So you you did sound like you were investing on your own. You said you’re like kind of no real rhyme or reason just knew some neighborhoods and kind of picked in we’re investing. I understood what you said. And how many properties Did you get up to? On your own just doing the single family stuff?
Stephanie Walter 8:00
I got about? I think it is about let’s see here. Four properties. One was a commercial, one was a duplex. And then there are two single families in there.
J Darrin Gross 8:15
Gotcha. It’s been a while since I’ve been to Denver, but your timing seems like it was probably spot on as far as just what I’ve come to understand about the appreciation in the marketplace there and, and the growth and any affordability issues that come with that. So I’m assuming that that that treated you well, are you still in any of those.
Stephanie Walter 8:41
Just again, when I was started working with the wealthy, I sort of noticed, you know, that my theory was I was just gonna hold on to these rentals until they were paid off, you know, and then have my retirement in 20 years. What I, one of the things I learned from the wealthy people was that they just don’t let their money sit and not give them cash flow or not give them you know, a good return. And so, when I realized that in 2018, I started selling all my properties, and I just sold my last one just a few months ago.
J Darrin Gross 9:20
Gotcha. Gotcha. So you’re in the is it primarily multifamily? Is that what you’re investing in now? And I thought I heard you say that you you did try syndication solo. Here. You’re doing one solo before you you ended up getting, you know, working with your partner, is that right?
Stephanie Walter 9:42
Correct. Yep, I did one solo project in 2018. Gotcha.
J Darrin Gross 9:49
And what was that project that you did?
Stephanie Walter 9:51
That’s it was up in Fort Collins I still have it was just talking actually to the banker today. It’s a It’s multifamily in the sense that it’s a group of people that live in it. So it’s a fraternity house of all things up in Fort Collins, Colorado. And it’s actually been a really great investment.
J Darrin Gross 10:16
Gotcha. And do you? Do you collect rent from the individual students? Or do you just collect rent from the, like from the fraternity? And then they they weren’t collecting from that?
Stephanie Walter 10:28
They pull it all together, and then they send me a check every month.
J Darrin Gross 10:33
Gotcha, gotcha. Well, that’s, that’s definitely an interesting thing. But I can imagine, depending on, you know, what you where you bought it out, and what the the market rents are, and stuff that that can be a profitable venture there for you. That’s good. So let’s talk a little bit about some of the concepts that you’ve learned. And maybe the way to frame this is kind of back up a step. And just kind of identify what the concepts are, or the beliefs you had about money. Before you you interacted with these wealthy investors. That you, you mentioned?
Stephanie Walter 11:15
Well, I think the biggest, you know, some of this took a while for me to really understand I couldn’t really put my finger on it. But, um, so but I think two, one is a mindset. And the mindset is pretty significant. Most people in our society look at their money and saving for retirement. They think of accumulating their money, that’s, that’s really the model that they have, put it away in their 401k, don’t touch it don’t really, there’s, you know, maybe you could you have a little bit of power of what it’s invested in. But largely, if you ask people, they have no idea what kind of fees that are associated with it. But the most significant thing is that at the end of that investment, we don’t know how much money is there, because we don’t know what the taxes are going to be. And that would be completely, simply not something that a wealthy person would get involved with. And that was, the first thing that I noticed is that most of the wealthy people I worked with did not have 401, K’s. They use a model of using their money, and I’m calling it utilisation. Which just means that they don’t let their money sit, their money is working for them at all times, and working for them in the sense that they are getting cash flow, cash flow is king to them. So and when you start to examine that, and sort of see how that would work in your own life, is just having more cash flow is going to give you a lot more options as to do I want to be working at this job, you know, 40 hours a week, or, you know, the more cash flow you have, the more options you have as far as what you want to do in your life.
J Darrin Gross 13:19
No, definitely. Cash Flow is king. And that’s one of my friends is fond of saying it’s the ace. I mean, it’s the definitely the one you want. Let me ask you. So you kind of mentioned even just earlier about kind of your mindset with the rentals you had was just to basically pay down the balance, you know, and then have this is your retirement then. And I’m kind of curious, so for you to shift from that mindset, and you know, having a job or you know, a business, to getting your money to work for you to where you’re you basically have passive income that, that it allowed you to, you know, sell your business and and, you know, have just enough passive income to live on. Well, can you describe some of the the shifts there? I mean, was it was it? I mean, what, what made you introduce some of these ideas that, you know, don’t let your money to sit? But can you kind of walk us through what what you did, as far as you know, some of the steps you took that made it made it work for you?
Stephanie Walter 14:35
Yeah. Well, I think one of the other concepts that I should probably tie into that is that if you asked a wealthy person, what they felt was most important to them cash flow or net worth. They would tell you cash flow all day long. And so that’s really that was really my shift in my mind because on paper, I had a great net worth as a fan. Casting networks, but I didn’t have cash flow even close to being able to replace my income. So once I that dawned on me, then I sort of kind of examined each property and that I had and how much equity did I have in in the property. And what I saw my future life looking like did I want to be a landlord forever. I’d already been one for 16 years, and I was growing pretty tired of it. But largely, there was an enormous amount of equity sitting in those properties. Now you can either take the money out, you know, refinance it, if that’s possible, and take the money out and invest it. But my decision honestly was, I felt the best place for this money where was in my own syndications that I was doing with my partner because what better place to invest your money. One as syndications are amazing in the sense that you’re getting paid. You know, almost from day one, you’re getting paid seven to 8% interest every month. But our syndications like I said, we’re on our seventh one, have been returning over 20% returns over the whole period of of the property, which is, you know, three to five years, that’s 20% a year. And like, I spoke to one of my wealthy investors, and was just talking to him about what I was thinking of doing. And he was like, well, Stephanie, all I can tell you is that if you’re getting 20% returns, that’s something that, you know, you will get wealthy doing. And and so that is what I decided to do. The second part of the other part of the coin on on that was people think about how they move their money, you know, do they do it in a 1031 exchange, because, you know, tax mitigation is hugely important. What I think is kind of like a little secret in this industry is there are so many ways to mitigate your taxes, a lot of people think the only way they can roll their money over is is is in a 1031, which we can do for some properties. But many times just, you know, what we do is we do a cost segregation study, most people haven’t heard of that. Or if they do, they don’t really understand it to the point of how we use it, we do a cost segregation study on every property we purchase. In order to pass what what that is, is instead of depreciating the property over like 27 years or 39 years, it speeds up the depreciation to where we’re writing all the depreciation off in 157 years. So it’s a it’s amazing strategy for people who have tax liability, or don’t have tax liability. But it’s it’s a tremendous tool to help you save on your taxes, and might have gone on a tangent there. But I think those are two things that wealthy people definitely address. They A lot of people think that they just address what is the investment making for them? That’s definitely, you know, probably half of their concern their other half is what kind of tax benefits are they going to get out of the investment? And I think that’s what most people miss. In our day to day world. We don’t A lot of people don’t think about the tax ramifications.
J Darrin Gross 18:55
No, I think those are all valid, worthy points to make there. I’m kind of curious. So the, the, the path that you were on, you mentioned you had a lot of equity. your net worth was, you know, significant. But the cash flow wasn’t there. When you started doing the, you know, kind of the syndication and stuff, or the syndications. How long did it take you to generate more income than what you were making through your insurance business to whatever rental income you had.
Stephanie Walter 19:35
Once I changed that philosophy, I guess and had had my what I wanted to do, which was to sell my different properties and roll them into different syndications that I had. It was 2018 and is when I started doing that and I retired in 2021 July 2000 You’re 21. So as opposed to maybe 20 years that it would have taken being a landlord and doing all the things I didn’t particularly love doing to get to the point to where you know that cash flow was coming to me.
J Darrin Gross 20:18
I love it. So tell me about some of the syndications you’ve done. You said you, you your Have you? You’ve done seven, you’ve started seven, where are you at in the cycle? How many of you run full cycle?
Stephanie Walter 20:32
At this point, we haven’t we, we only have one that’s run all the way through the cycle. Because we started doing this, let’s see, in 2018. And actually, one, there’s going to be several actually, in the next probably six to 10 months that will will actually finish ahead of schedule. But I can just tell you, what we do is we look to our largely we look in Florida, we do multifamily, we look for properties that you know, how are undervalued? So we look, a lot of people are like Why can’t I you know, just do this on my own? Well, I can tell you that we, you know, have many connections in Florida. That’s where my partner is actually he has 35 years of being a commercial broker there. So he’s established a lot of businesses and our last two syndications were actually off market deals. So deals that never came to market. And the reason that we obviously love those is we really feel strongly that we want to make our money on the buy. We don’t want to buy a property and just say, well, we can do this, this and this to increase the value. We’re extremely conservative with with what we do, but yes, we’re looking for multifamily properties a way that we can build up value. And in Florida right now, that’s not that hard. We’ve we’ve cornered a few markets, we were on our fourth deal in Tallahassee, Florida. We’re on our second deal in Cape Coral, Florida. We have some properties in Broward County. But you know, the Florida if you look at it and you get do any type of research on it, is the there’s just a tremendous amount of growth. I mean, if you listen to any any news, I suppose you pick that up pretty quickly. But there’s a lot of there’s just a tremendous amount of growth in the housing. There’s definitely housing shortages, which are causing the rents to just kind of go through the roof. And we’re taking advantage of that. So the one property that we’re going to be finishing up the cycle on, we’ve only had it for two years, and we’ve already doubled the money of all of our investors. So we’re just gonna go ahead and sell that one and move on to the next.
J Darrin Gross 23:19
Outstanding. In Is there any kind of a sweet spot? Are you guys going after 100 unit properties are you going after tends to, you know, 20s, or tell me a little bit about what your what you’re going after on these different property?
Stephanie Walter 23:36
Well, I we both kind of, again, it’s we’re very aligned on our philosophy, it just kind of happened that way, I’d love to say that I had a master plan to find someone that we aligned so much, but we both really like the idea of being in control of our deals. And you know, you a lot of people come into this space and they go in they buy two and 300 unit complexes in order to close something like that you need to be bringing in money from what are called family offices. They’re just you know, offices where they’re meant managing very wealthy families money. But kind of the deal you make when you work with that these people is they want to really have their hand and what’s going on in the deal. And for my partner and I we just we really wanted to grow our investor base, just very organically. We both are you know, extremely concerned with having our clients love working with us and continue on to love working with us. So we started smaller. We started with like, you know, 23 units, 35 units, then we’re now we’re more in the 50 to 70 units. And so we just have kind of grown organically, which is what we wanted to do, we wanted to be sure that we have a good track record of performance plus, we can see our, you know, our investors are happy, you know, that, which is what we want, they refer more investors to so we’re really concerned with building a base of investors that follow us. And so that we just put under contract 160 unit, and that’ll be our largest 1160160. And so, you know, I feel like what we’re doing is working, because, you know, we have investors that invest again and again, and then they start telling their friends and, you know, on and on, and, and that’s what we wanted. We wanted to, you know, be in charge of our deals at the end of the day. Because having the control is is super important. to both of us.
J Darrin Gross 26:03
Yeah, no, I love that I love the approach the growth, I was gonna ask you were organic. Tell me a little bit about tracking investors, especially at the beginning.
Stephanie Walter 26:17
It’s, you know, I could talk for hours about that, it’s, you know, it’s, you want there to be one magic bullet, unfortunately, there just really isn’t, you know, I just happened to kind of put it out there to a lot of different people that this is what I’m doing, you get in front of people, and some people, most people have never heard of syndication. So it’s really trying to educate people to get their mind around the syndication. I was just thinking of it this morning, our first deal we did happen to be a retail center in Tallahassee, it was the first deal My partner and I worked on together, so we had zero track record. So you had to, you know, really get out and, and sell us as a team and what we wanted to do, and I’m just so you know, very grateful that it works that way. But I’ve tried, you know, different marketing things that it really just honestly comes down to marketing. But for me, it’s the relationships I have, I just really foster those, you know, I’m meeting an investor this afternoon. And, you know, you get to know their families and you know, they they become someone who wants to see you succeed. And the best referral best thing, we ever get our referrals. But definitely, I’m, I’m trying to be more active on LinkedIn, and different things like that. I’ve never bought any accredited investor leads. But I’ve, I’ve done a little bit of everything. I even did a a direct mail campaign and ended up getting an investor that way, which was was pretty cool. But yeah, you just kind of have to use the approach of, you know, just disperse wildly, and hopefully you’ll you’ll catch a few. But yeah,
J Darrin Gross 28:19
So let me ask you what, in that process of tracking investors, how much of it the Do you find your time as educating your prospective investor? As opposed to, you know, gaining their trust and that you’re going to be able to execute?
Stephanie Walter 28:39
Yeah, I think, largely, for me, it’s educating it that that part actually really surprised me. When I went into this business, because I think myself, like so many people that get into syndications people, the people that teach you say, if you find the deal, the money will come. There’s really nothing further from the truth than that. So yeah, it definitely, it’s a little bit of both, but education and creating content, I’ve really made an effort to create a ton of content on my website. And because, you know, it is an education process, but I love it, because I’m, I am really passionate about it, because I just feel like, you know, this is a secret that, you know, the big banks and insurance companies and the wealthy have been taken taken advantage of for years. And I just want people to know that there’s a better way to do things. And so it makes it easier and more. It makes it fun for me to talk about this as opposed to insurance, which I love to but not as much as this.
J Darrin Gross 29:54
I understand. Yeah. So, so let me ask you, so We talked a little bit about the investors, it sounds kind of like, you know, kind of a foreign wide approach. I’m assuming you started with the people closest to you, friends and family, where did you get any? participation?
Stephanie Walter 30:16
My, my, my first deal was my friend was my family, both family and friend of my family member, it was a little funny because my brother in law was really interested in real estate, but he’s, you know, really busy sales guy and brought him this this deal with the fraternity house and he said, you know what stuff that’s the fraternity I was in when I was in college, I definitely want to invest in that. And then he told his friend who liked the ideas. Well, and so the I only needed to bring three investors in on that one. But yeah, so that that, you know, it’s a it’s definitely a mind shift to have to talk to your family and friends about money. But yeah, the My family has been really supportive. But you know, you do have to branch out, you know, and you find that out pretty quickly. So, and I think it probably does get, well it definitely gets easier for us, the more you know, syndications, we have now more of a track record to show it to people.
J Darrin Gross 31:32
Sure. Now, if you’ve if you’ve done it, some of those trust issues would would, I would think be pretty easy to get past. Knowing that you have some sort of performance or or record. I want to ask you a little bit about the value you’ve been creating 20% per annum per year returns are impressive period. What are some of the the strategies or the things that you guys look for? Or what what are some of the ways you’ve been able to create value? Let’s Let’s ask it, though.
Stephanie Walter 32:06
I yeah, I love commercial real estate for that very reason is, is increasing the value of the property by forced appreciation. It’s, it’s super cool. The, you know, most of us have only heard of, you know, natural appreciation, but in these really any type of commercial real estate, but we focus largely on the multifamily. So we found, you know, you find some properties who a lot of people get into this, like, just think of it like going and buying, like a single family home from someone who’s been running it on their own. You can find a lot more ways to be efficient when you go in when you have the experience and the systems and everything like that. So for us, we knew the market market is key, like, above anything else after watching COVID is market is everything. And we have definitely put a lot of time and effort into finding markets, understanding them, the dynamics that’s happening there. So it’s not like we just pick a property and say, Oh, this would be a nice area. No, we do, you know, probably hundreds of hours of research on that economy and what’s happening there. So we want to be sure there’s population growth, there’s going to be, you know, economic growth coming in, that it’s a landlord friendly place to be, you know, just just all of those things, but Tallahassee, I’ll just that one comes straight to mind is what they did years ago is they kind of overbuilt the student housing there. And what ended up happening as a result is there’s a real lack of affordable housing for just regular people wanting to live in apartments. And so we took advantage of that. So when I say take advantage of that we purchased, we purchased properties where we knew the current landlords did not have those rents where they needed to be, you know, if you’ve ever been a landlord Do you know sometimes you’ll just like, let the rents keep coming in at you know, you don’t raise the rents like you should. So we go in we we find places that need the market rents to be adjusted where they should be. But then there’s a whole host of other things we can do to streamline the process. A lot of places do not charge for utilities or if they there, they’re just very consistent with the way that they do that. That’s another way of gathering money. There’s, you know, silly things like pet fee. A lot of landlords don’t charge for that I even the sounds like weird one, but it’s something we find is is trash, trash, valet services. So any little thing where you can add, you know, a charge for it is going to increase the value of the property. And so the more the way that commercial real estate is valued is the income minus the expenses, is that net income, and that determines the value of the property. So if you, you know, are able to streamline the expenses and lower those 10% and increase the, the income, you’ve just increased the value of that property 20%. So that’s, you know, working with a team that’s really has a strategy on how to maximize those things, you know, is, is that’s how we give our clients those 20% plus returns.
J Darrin Gross 36:07
I love that I didn’t hear you say anything about you know, remodeling or renovation, it was more sounds like it’s more operational that typically the the type of property you’ve been able to find is something that’s just not managed as efficiently or
Stephanie Walter 36:22
Management is the number one thing you’d be so surprised that how many people do not run, these are businesses, you know, at the end of the day, and they don’t run them like a business. And that’s probably the number one way that you can add value into a property. But we do on a few of our properties, we do like small micro rent renovations we’re not, we tend to more invest in what are called B properties properties are, you know, broken out into a, b and c properties a properties are, you know, the luxury with the pools and the concierge and all this stuff, B properties are more kind of, you know, the average type of type of not two worlds. And, and those are the ones we really like to get into sees are they need a lot more work. They’re older, they attract a different type of clientele. And what we’ve noticed, because we keep track during recessions is during a recession, bees tend to do very well, because the aid people are moving down into the bees. And that’s, that’s what we’ve seen our rent collection through COVID stayed at 96%. So that, you know, I think is, is pretty remarkable.
J Darrin Gross 37:53
Yeah, from what I understand, I mean, I’ve got clients, insurance clients that I know, that are way behind on some collections, just based on family, the eviction moratorium and the you know, you don’t need to pay rent kind of a mentality.
Stephanie Walter 38:09
And also probably be more like tenants found and see, honestly see type of the bees, they have jobs, you know, probably mostly professional people. So yeah, so there’s lots of different, you know, elements to really think about when investing in properties.
J Darrin Gross 38:33
Currently here so the bottom line on this think different about money is that you view you know, you learn from some of your investors, you basically kind of put your money to work for you more rather than waiting, waiting to use it, kind of thing. And now your your sounds like your cash flow is increased markedly. Is that fair?
Stephanie Walter 38:56
Yeah. Yeah. And I think that, you know, another myth that people think is they think, well, you you became wealthy because you invested in really high risk things, things I would have never wanted to get involved with. And actually nothing could be further from the truth. The wealthy people that invest syndications are what historically one of the best places to have your money in the sense that you get above average market returns with probably one of the lowest amounts of risk that you can have. Another thing that I noticed about the wealthy people, especially this is a little timely is that we’re expecting inflation. And wealthy people tend to want to invest in tangible assets in things that have a value like building a property. They want to invest in businesses. Want to invest in something that has a value to it? And especially when we think of inflation, I had to talk in an event A few weeks ago. And just out of curiosity, I came across this fact, which was from 1980 to 2021, on average, the rents have gone up 8.86%. You know, and that’s probably a number that they, you know, that involves the whole United States. But that’s a heck of a number. And that does show why these, you know, to put your money in a place like multifamily rents is going to be pretty, pretty, not only recession resistant, but definitely a great hedge against inflation.
J Darrin Gross 40:53
Definitely want to ask you is you’re raising capital from investors? What kind of criteria do you have for your investors? Is there a minimum? Or? Or can you speak to that a little bit?
Stephanie Walter 41:06
Yeah, well, we do. You know, solely right now, we’re doing 506 C’s, which means that we work with accredited investors and an accredited investor, it’s pretty simple, you don’t need, you know, to get a license or anything like that. But all it means is that you qualify to invest based either on your income or your net worth. And for us the, or for the accreditation, you need to if you’re single, make over $200,000 a year, if you’re married, you need to make over $300,000 a year, if you don’t qualify, that way, you can also qualify based on your net worth. And that just means that minus your primary residence, you need to have a net worth of a million dollars. And actually, since you said you were in an insurance, there’s actually another way of qualifying. And that’s if you have your series 63. Six, I want to say one more, because I just kind of found out about this. So that’s another way that you can qualify to to be an accredited investor, and we usually for require $100,000 minimum for that investment.
J Darrin Gross 42:29
Now, it’s it’s a, I love the whole syndication model, it makes a lot of sense. And I think the, when you realize that, you know, these larger properties, the effort it takes to take one down, it’s, it’s pretty, you know, pretty big challenge, if you’re going to try and do that by yourself so big, that it’s likely you wouldn’t be able to, but again, like by pooling resources, you can get to a big enough number. And the real key to this whole thing that this is the piece that it’s taking me forever to kind of really cement and understand this is, the bigger the investment you’re in, that appreciation applies to the whole investment. And then when you take that the equity gain you get from where you bought, where you sell, and then you apply that against what your your down payment, or the equity you invested in the property. It’s, it’s like, wow, you know, eye popping, as opposed to, again, my mindset when I first got in, was when I bought, I put my money in, and I’m just gonna watch the balance owed to the bank go down. And that’s going to be my, my equity, and it really is kind of a mind shift, because that’s, that’s just not really investing that’s just kind of waiting. You know, it’s kind of my mindset when I first started investing, but it is a really, you know, a powerful thing, when you realize, the, you know, the the, the idea is to get in as to as big as you can, you know, that you’re comfortable with, but that’s really where the power is, is that because you’re leveraged into that and, and how how much that return on the total is going to improve your investment return on your, you know, the portion you invest itself makes a lot of sense to me. Hey,
Stephanie, if we could, I’d like to shift gears here for a second. As we’ve mentioned, by day, I’m an insurance broker myself. And I work with clients to assess risk and determine what to do with the risk. And there’s three strategies we typically consider. We look to see if first we can avoid the risk. When that’s not an option, we’ll see if we can minimize the risk. And when that’s not an option, then we look to see if we can transfer the risk and that’s an insurance policy. And I like to ask my guests if if they can look at their own situation. Could be clients, investors, tenants, a market government however you want to you know, I guess The question, but but if you can take a look at your situation and consider what you think is the biggest risk. And, again, for clarification, while I’m an insurance broker, I’m not necessarily looking for an insurance related answer. So if you’re willing, I’d like to ask you, Stephanie Walter, what is the biggest risk?
Stephanie Walter 45:29
I think you know what? That’s a good question. I think that the biggest risk, if it comes down to people investing in syndications is I guess, really understanding the team of people that you invest with? Seeing that they have a track record. I actually have, on my website of, I think about 30 questions that I get from almost every investor, and they involve risk and how to mitigate it. And so that’s definitely a good, a good, you know, spot to start. I think the largest risk that I’ve seen personally of you know, people who have invested in syndications and kind of maybe not done so well, the last few years, I think, and knowing your market, or at least, being with people that really understand the market, that they’re working in. That that I think, is huge. Because, you know, we’ve seen dramatic differences, like I said, between say, a B property, how it’s performed through COVID versus a C property. As far as rent collections, we’ve seen differences in the way that you know, that these properties have done in Florida as opposed to say, Indiana You know, there’s just there are definite you know, things about these these different markets that either you need to trust the you know, team that’s bringing you these deals, but these are there are risks, you know, and you’re doing your due diligence is is definitely important.
J Darrin Gross 47:30
No, could not agree more. Hey, Stephanie, where can listeners go if they’d like to learn more connect with you.
Stephanie Walter 47:39
But my best place is my website, which is www dot e r b, e wealth.com. And, yeah, I’ve got some, like I said, I have a lot of content there. Usually, you know, newer investors will download. We have a new report there. That is the five reasons that passive investing might be for you. But then I mentioned that video series that where I talk about, you know, important questions that you as an investor need to ask when you’re betting a deal.
J Darrin Gross 48:17
Awesome. Well, Stephanie, I can’t say thanks enough for taking the time to talk today. I’ve enjoyed it. I’ve learned a lot and I look forward to doing it again soon. That sounds great. Thank you. All right. For our listeners. If you liked this episode, don’t forget to like, share and subscribe. Remember, the more you know, the more you grow? That’s all we got this week. Until next time, thanks for listening to commercial real estate pro networks. CRE PN Radio.
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